Can someone tell me the difference between Whole Life and Term Life insurance? Help?

Question

I'm not sure if this is the right catagory, but I need some answers before I change insurance companies, so any help here is greatly appreciated.

Answer 1

The others are right about term and whole life insurance. But when considering whole life insurance, think about this... You are building up cash value that you can "borrow" from yourself. The insurance company invests that money and you get very little of the interest. If you do die, all the extra that you had paid in for this "savings" program suddenly disappears. Your family gets the value of the policy, but what about that OTHER $25,000? The company keeps it. Term life is for a set period, but it is cheaper and has no gimmicks. When the term is up, get another policy.

Answer 2

Most of the big name financial advisors recommend that you buy the insurance that your need.  If you need coverage for a period of time buy that, if you want a death benefit until you actually die, then go longer.

Instead of whole life though go with (consider I shoudl say) a universal life that gives you a guaranteed premium until you're 100 years old.

A combination of policies can work for some, but if you make less than $100,000 per year then (shooting from the hip) a term policy OR even better a return of premium term policy will suit most of those folks.

Use the tool on my site to quote the different available plans.  It requires no personal information yet it quotes the carrier direct rates (which is lingo for the rate you'd pay) from ~150 different carriers.

Look at term, return of premium term and to age 100 coverage....

http://insurancepickle.com/life-insuranc...

For the record I'm not a fan of whole life at all, but that doesn't mean the product doesn't fit the situation.  AND, I'm not a fan of these hokie companies trying to sell a whole life insurance policy and become 'their own banker.'  There are plenty of scams surrounding the sale of the product, but that in and of itself doesn't make it a bad product.  I own a version of both types of products.

AND you don't want to take advice about life insurance from someone who clearly spent their career selling car and homeowners insurance.

Answer 3

term insurance is good for the term it is for, 10yr, 15, etc.

at the end of the term it is worth nothing.

whole life builds a cash value, is considered"permanent" because as long as you are paying, or when it is paid up, it is in force. the cash value can be used to borrow against, etc.

in my opinion, term is good for a short term need, or if you cannot afford whole life. otherwise it is like renting insurance instead of owning it

Answer 4

Whole life is insurance you get (usually it builds cash value as you make payments) that is in effect until you die or cash it in.  Term Life is cheaper, does not build cash value and will only cover you for a set period of time, like 20 years and then it ends even if you have not.

Answer 5

Whole life, is where they set a premium, and you pay it every year, for your whole life.  The premium never goes up.

Term life, is where they set the premium for a set number of years.  When the term expires,  IF they renew the policy, the premium goes up.

For whole life, it costs about 10X what term life costs.  You will be told, there's "cash value" or "investment" or "savings" components.  Eventually, you can borrow a percentage of what you've paid in  (but you pay interest to the insurance company).  If you're going to want it in place when you're 95, no matter how much money you have then, it's a good thing.

Term life, you can buy it for up to 30 years a term, and you can buy it so that they HAVE to renew it - or convert it to whole life, upon your request.  

RUN THE NUMBERS.  Most of the time, buying term, and investing the difference, you'll have more money in 30 years if you live, OR if you die, than buying whole life.  Most of the "big name" financial advisers - Suzie Orman, Dave Ramsey, etc, advise you ONLY buy term.  

But agents make a way, way, way lot more money off the commission of a whole life policy.